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Paris climate goals seen requiring tripling in RE investment

REUTERS

GLOBAL renewable energy investment needs to triple to nearly $800 billion by 2050 in order to meet climate goals set out in the Paris Agreement, an intergovernmental organization said in a report.

Funding for renewables must accelerate if the Paris goal of keeping the average global temperature rise below 2 degrees Celsius, according to the International Renewable Energy Agency (IRENA).

“Annual investment in renewables would need to almost triple… to almost $800 billion (a year) through 2050,” it said.

IRENA said more investment is needed in system integration technologies like distributed energy resources, batteries and energy storage.

IRENA estimated that in the post-COVID years of 2021-2023, average annual investment of $2 trillion in renewables and other energy transition-related technologies have the potential to create 5.5 million additional jobs, according to a separate statement issued Wednesday.

In its report, IRENA said total global renewables investment between 2013 and 2018 amounted to $1.8 trillion, driven by falling costs and more efficient procurement.

It added that solar photovoltaic (PV) and onshore wind power took up the largest share of investment at 46% and 29%, respectively, during the five years to 2018.

The private sector remains the biggest provider of capital for renewables projects, accounting for 86% of investment during the period. The specific funding sources for such works were project developers (46%), commercial financial institutions (22%), and public finance (14%), according to IRENA.

East Asia and the Pacific attracted the most renewable energy investment, taking in 32% of global financial commitments during the five-year period. Regions dominated by developing economies were described as “consistently underrepresented,” taking in only 15% of the global total.

According to the report, solar PV and other solar products were responsible for the bulk of off-grid renewable energy investment.

The organization said that the share of investment from investors committing to off-grid renewables in Southeast Asia and Sub-Saharan Africa grew to over 33% from 1.6% in 2019. “(This was) driven by a surge in private investors’ activities (either) domestically or within the same region,” it said.

IRENA also reported that South and Southeast Asia were both able to attract over $244 million in off-grid renewable investment between 2007 and 2019, after a record $97 million last year.

IRENA supports countries in transitioning to sustainable energy. The Philippines is an IRENA member. — Angelica Y. Yang

Wellness touted as potential economic growth driver

INVESTING IN WELLNESS holds the potential to boost Asian economies by eliciting more productivity from healthier workers, according to an Asian Development Bank (ADB) economist.

The wellness economy is a large and growing part of the region’s overall economy, according to Donghyun Park, principal economist at the Macroeconomics Research Division of the ADB.

In a webinar Wednesday, Mr. Park said the wellness economy accounted for 11% of developing Asia’s gross domestic product in 2017, and has been growing about 10% on average in recent years.

His presentation indicated that in the Philippines, the sector accounted for 4.6% of gross value added in 2017, up from 4.2% in 2012.

“COVID-19, by highlighting the importance of physical and mental well-being, could give a further boost to the wellness economy in the coming years,” he said.

Fear of illness has been pronounced in vulnerable segments like the elderly and those with pre-existing health conditions, making them more aware of the importance of staying healthy.

“The lockdowns and social restrictions, being isolated from others, also add a lot of stress and anxiety. COVID-19 strengthens the case for individuals and societies to take action to pursue wellness (via) conscious and deliberate actions, choices and lifestyles to improve physical and mental health,” he added.

Physical activity can be boosted by higher spending from both the public and private sectors, he said, promoting fitness, exercise and mindfulness. This can come in the form of more parks and recreational facilities, walking paths, bicycle lanes and mass transit, which would require improved urban planning.

To promote wellness, Mr. Park said governments in Asia, particularly in poorer countries, can engineer healthy built environments starting with walkable sidewalks and improved public infrastructure. It can also promote nutrition and healthy eating as well as safe and healthy working environments.

“Wellness is vital for Asia’s economic and social recovery,” he said.

Ophelia Yeung, a senior research fellow at the Global Wellness Institute, added that there is a misconception that wellness is only for the rich.

Since wellness is about the active pursuit of holistic health, she said at the webinar that maintaining wellness is a lifestyle choice.

In richer cities or countries, Ms. Yeung said more people shift to a sedentary lifestyle as their income increases while stress levels rise as they climb the corporate ladder, making such people vulnerable to chronic illnesses.

“Some 85% of our health outcomes are determined by our lifestyles and our environment and as people in countries who get wealthier, there is a trend of suffering less from infectious disease, while suffering more from chronic disease such as heart disease, diabetes, hypertension and obesity. A lot of these are preventable,” she said.

However, rising healthcare costs remain a challenge for people in developing countries, she said, while many are exposed to illnesses due to lack of access to healthy food and exercise.

“Wellness is about a lifestyle. From a policy perspective, it is about helping people to invest in a healthier lifestyle so that they can do healthy things… and the return on investment is very very high in many aspects: in terms of productivity, fewer sick days and a much lower healthcare costs,” she said. — Beatrice M. Laforga

DTI business registrations in year to date top 2019 total

THE department tallied 839,444 business registrations between January and early November, outpacing the 2019 full year by 32%, Trade Secretary Ramon M. Lopez said in an online event Wednesday.

They generated P475.2 million in business name registration revenue for the DTI (Department of Trade and Industry), up 38% from 2019.

Online business registrations totaled 82,870 from the start of the lockdown in March to Nov. 4. There were only 1,753 registrations for online businesses in January.

The government placed Luzon under lockdown starting mid-March, halting nearly all economic activity. Except for those offering essential services, many bricks-and-mortar stores were shuttered, prompting consumers to turn to online shopping.

“DTI’s end-to-end Business Name Registration System (BNRS) — which we launched last November — more than likely encouraged our people to establish their own business even with the lockdown preventing them from going out,” Mr. Lopez said. — Jenina P. Ibañez

Rice Tariffication Law tweaks seen better than return to old policy

rice grains
PHILIPPINE STAR/KRIZ JOHN ROSALES

DRAFTING policies that complement Republic Act No. 11203 or the Rice Tariffication Law should be the focus rather than seeking its repeal and returning to the old system, economists said.

In a webinar Wednesday, Ateneo de Manila University Associate Professor Majah Leah V. Ravago, a specialist in resource and development economics, said it is too early to call for the law’s repeal.

“We should give the law a chance. We have to look at the issues and address it with policies that can complement the reform so that the benefits of the law will go down to the farmers and consumers,” Ms. Ravago said.

“I think we should not go back to the previous policy regime and instead move forward on how we can improve or augment the reform passed,” she added.

Implemented in 2019, the law allowed for unrestricted imports of rice, which were then charged tariffs. Some P10 billion of the tariffs will be allocated to the Rice Competitiveness Enhancement Fund (RCEF) each year.

RCEF is authorized to invest in farm mechanization, credit, and training programs.

Farm organizations have been calling for the repeal of the law, claiming that it caused a drop in the farmgate price of palay, or unmilled rice, and resulting in lost income for farmers.

University of the Philippines School of Economics Professor Karl Robert L. Jandoc said the government should focus on finding new ways to implement assistance such as fertilizer subsidies and mechanization grants.

“We should think of new ways to deliver old policies to farmers,” Mr. Jandoc said.

Former Agriculture Undersecretary and current Monetary Board member V. Bruce J. Tolentino said the farm sector has been “historically” underfunded and its total budget must be increased.

Mr. Tolentino said given a bigger budget, the government should shift resources to interventions that will strengthen productivity and help farmers achieve higher yields.

“The budget should be allocated to science, technology, and support for farmers to improve their capacities,” Mr. Tolentino said.

The Department of Budget and Management allocated P66.4 billion pesos for the Department of Agriculture (DA) in the 2021 budget.

The proposed department budget is 17% lower than the DA’s current budget of P79.9 billion and much less than the P240 billion it sought. — Revin Mikhael D. Ochave

Coast Guard modernization bill filed in House

A BILL proposing to modernize the Philippine Coast Guard (PCG) has been filed at the House of Representatives, to boost its capability to counter intrusions by foreign vessels.

House Bill No. 7965 calls for upgraded technology and more bases of operation for the PCG.

“Enforcement of our maritime laws can be more effective with the gradual addition of PCG field offices, bases, and facilities at a pace that is prudent and realistically affordable through the national budget and official development assistance,” Bohol Representative Kristine Alexie B. Tutor, the bill’s author, said in a statement Wednesday.

The measure authorizes the procurement of microsatellites, smart buoys and drones for deployment to strategic locations and bases in the Kalayaan and Tawi-Tawi Islands.

Other locations proposed for PCG facilities were the Batanes group, Basilan, Dinagat, Polillo, Catanduanes, Samar, Leyte, Bohol, Guimaras, Mindoro, Panay, Siquijor, Marinduque, Romblon, Masbate, and Camiguin.

The bill also would require the Department of Transportation, in collaboration with the Department of Science and Technology, the Department of Information and Communication Technology, Department of National Defense, and the Philippine Space Agency, “to cause the creation, deployment, management, and operation of maritime microsatellites for specific multiple-purpose mission tasking consistent with the missions, roles, powers, and functions of the PCG.”

“These steps would enable the PCG to expand and deepen its coverage at strategic locations nationwide,” Ms. Tutor said. — Kyle Aristophere T. Atienza

Renewables adoption requires ‘whole-of-society’ approach — NREB

THE transition to renewable energy requires the involvement of every segment of society with greater public engagement possibly encouraged by the government’s recent ban on new coal-fired power plants, the head of a government board overseeing renewables said.

The Department of Energy (DoE) freeze on new coal projects sets the stage for “all hands on deck” to participate in the promotion of renewables, according to Monalisa C. Dimalanta, who chairs the National Renewable Energy Board.   

“One of the recommendations….that we are proposing to the DoE is the setting of (specific) targets….that’s the work that really needs to be done. It’s not something that one sector or group can just decide on. It needs a whole of government, whole-of-society approach,” she said during an online forum organized by BusinessWorld, “What’s Next for Renewable Energy?,” a conference in the BusinessWorld Insights series.

The target for the Philippines is a 35% share for renewables in its power supply mix.

Ms. Dimalanta said banks, which finance energy projects, will play a role in promoting renewables.

Angela C. Ibay, the Climate and Energy Programme Head of the World Wildlife Fund (WWF) Philippines Climate and Energy Programme, said local government units need to play an active role in planning for their energy needs.

“Local governments plan for their (constituents’) development. They know what they want from their constituents but they never really understand the power requirements or the energy requirements to fuel the development that they want,” Ms. Ibay said.

At the forum, Senator Sherwin T. Gatchalian, who chairs the Senate Committee on Energy, said major coal-fired plants on Luzon are experiencing difficulties because of the volatility of demand and prices in April and May. He said demand fluctuations have exposed the inflexibility of plants powered by fossil fuels.

Energy Development Corp. President and Chief Operating Officer Richard B. Tantoco said the prospects for renewables in the Philippines are bright.

“Our country is in a good spot to develop renewable energy. With the right support and some policy shifts, I am confident that we can be one one the top RE generating countries on earth,” Mr. Tantoco said. — Angelica Y. Yang

Conditions on the relief for early retirees under Bayanihan II

As we continue to navigate a new normal and grapple with these times of uncertainty, we have come to immensely value clarity. In this aspect, with the passage of Republic Act No. 11494 (Bayanihan II), the Bureau of Internal Revenue (BIR) released issuances to clarify its implementation. Among these are Revenue Regulation (RR) No. 29-2020 and Revenue Memorandum Circular (RMC) No. 120-2020, which intend to explain the tax exemptions on certain income payments given to employees during the pandemic.

These regulations are welcome aids. However, in what appears to be a Catch-22 situation, such guidance carries restrictive trade-offs.

CONDITIONS FOR RETIREMENT-BENEFIT TAX EXEMPTIONS
Section 5 of Bayanihan II provides that early retirement benefits granted to privately employed persons between June 5, 2020 and Dec. 31, 2020 are exempt from tax. The exemption, however, may be revoked if the individual is re-employed by the same organization within the succeeding 12 months. Re-employment is proof of non-retirement, making the benefits subject to the appropriate taxes.

These conditions are echoed in RR No. 29-2020, which also clarified that such relief is exclusive of the existing tax exemption under Section 2.78.1(B)(1) of RR No. 2-1998, as amended. This means that employees who avail of the retirement exemption under Bayanihan II may still qualify for another exemption in the future upon meeting the conditions under Section 32(B)(6)(a) of the Tax Code, which provides a minimum retirement age and years of employment.

However, the RR also provided that the exemption under Bayanihan II only applies to retirement benefits paid under a plan duly registered with the Bureau. Such a condition is noticeably absent from the provision in the law. This additional administrative requirement was reiterated through the clarificatory examples provided in RMC No. 120-2020.

Despite the welcome clarity that the regulations provided, this prerequisite makes the exemption restrictive. Effectively, fewer retirement plans qualify for this tax relief in comparison to the existing Tax Code exemption, which also exempts the minimum retirement pay under the law in the absence of a private retirement plan. Ironically, the implementation of the exemption contradicts the implicit intent of the law, which is to provide universal relief to both businesses and individuals. Consequently, the BIR did not merely interpret the law but appears to have legislated beyond the statute passed by Congress. Well-settled is the principle that administrative regulations cannot go beyond the law to amend a legislative enactment.

Moreover, RMC No. 120-2020 clarified the period of availment to qualify for the exemption. Both the date of retirement and the date of receipt of the retirement pay should fall between June 5, 2020 and Dec. 31, 2020. This prohibitive interpretation of the law further advanced the conflicting objectives of the BIR regulations and Bayanihan II.

Given the limited nature of this retirement tax exemption, one may be inclined to prefer the receipt of separation pay instead. Terminal pay is also tax-exempt when granted due to separation beyond the control of the employee. Thus, the BIR regulations may have rendered the tax exemption in Bayanihan II less beneficial and less useful in comparison to the options currently available in the law.

TAX FILING AND ADMINISTRATIVE REQUIREMENTS
Despite such drawbacks, RR No. 29-2020 and RMC No. 120-2020 provide clear guidance on the administrative and filing requirements for the tax exemption. Employers are required to submit a one-time list of the recipients of these early retirement benefits, due on Jan. 15, 2021, to the appropriate Revenue District Office (RDO) or the Large Taxpayers Service (LTS). Employers must also include such payments in the Alphabetical Listing (Alphalist) they submit annually. Further, the employee is entitled to a refund if taxes have been withheld from benefits qualified for exemption.

In the event of re-employment within 12 months in the same organization, the exemption is revoked. In such case, the individual and the employer will share the responsibility of subjecting the retirement benefits to the appropriate taxes, depending on when re-employment occurs. In case the retiree is re-employed during 2020, the employer is to include the retirement benefits paid as gross taxable income of the employee during its year-end annualization.

The responsibility shifts to the employee if re-employment occurs in 2021. In this case, the employee must file an Annual Income Tax Return to declare the benefits received and pay the taxes due thereon. The return is due on April 15, 2021, if re-employment happens between Jan. 1 and March 16, 2021. This deadline is extended without penalty to Oct. 15, 2021 if re-employment occurs between March 17 and Sept. 15, 2021. Beyond this date, the deadline is 30 days after re-employment. Concerned employers are also required to submit a quarterly list of re-employed retirees 30 days after the close of every quarter in 2021.

In addition to the guidelines for tax-exempt retirement benefits, RR No. 29-2020 also covers tax-exempt income items provided to frontliners. These income payments include (1) COVID-19 Special Risk Allowance provided to health workers, (2) Actual Hazard Duty Pay given to Human Resources for Health, and (3) specified amounts of compensation paid to health workers who contracted the disease or passed away while in the line of duty.

The pandemic has not only halted movement within communities but has also reordered society. Inevitably, hardships and obstacles will abound, exponentially increasing the value of support, reassurance, and relief. This need is what Bayanihan II seeks to satisfy. However, the long-term benefits and real merits of this law will only resonate if implemented by regulations that undertake the same purpose.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Audrey Anne A. Arocha is a Senior Associate at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 8845-2728

audrey.anne.arocha@pwc.com

Deep-freeze challenge makes Pfizer’s vaccine one for the rich

WHEN Pfizer, Inc. and BioNTech SE’s coronavirus disease 2019 (Covid-19) vaccine rolls off production lines, Shanghai Fosun Pharmaceutical Group Co. will be waiting to distribute it through a complex and costly system of deep-freeze airport warehouses, refrigerated vehicles and inoculation points across China.

After they reach vaccination centers, the shots must be thawed from -70 degrees celsius and injected within five days, if not they go bad.

Then the herculean journey from warehouse freezer to rolled-up sleeve must be undertaken all over again — to deliver the second booster shot a month later.

The roadmap sketched out by the company, which has licensed the vaccine for Greater China, offers a glimpse into the enormous and daunting logistical challenges faced by those looking to deliver Pfizer’s experimental vaccine after it showed “extraordinary” early results from final stage trials, raising hopes of a potential end to the nearly year-long pandemic.

That euphoria is now being diluted by the realization that no currently used vaccine has ever been made from the messenger RNA technology deployed in Pfizer’s shot, which instructs the human body to produce proteins that then develop protective antibodies.

That means that countries will need to build from scratch the deep-freeze production, storage and transportation networks needed for the vaccine to survive. The massive investment and coordination required all but ensures that only rich nations are guaranteed access — and even then perhaps only their urban populations.

“Its production is costly, its component is unstable, it also requires cold-chain transportation and has a short shelf life,” said Ding Sheng, director of the Beijing-based Global Health Drug Discovery Institute, which has received funding from the Bill & Melinda Gates Foundation.

The expense of deploying the Pfizer shot will likely heighten existing fears that wealthier nations will get the best vaccines first, despite a World Health Organization (WHO)-backed effort called Covax that aims to raise $18 billion to purchase vaccines for poorer countries.

It also presents a choice now faced across the developing world: to pay for the expensive construction of subzero cold-chain infrastructure for what seems like a sure bet, or wait for a slower, more conventional vaccine that brews batches of protein or inactivated viral particles in living cells, and can be delivered through existing health-care networks.

“If there is a protein-based vaccine that could achieve the same effect as an mRNA vaccine does and there’s the need to vaccinate billions of people every year, I’d go for the protein-based shots in the long run,” Mr. Ding said.

Even for rich countries that have pre-ordered doses, including Japan, the US and the UK, delivering Pfizer’s vaccine will involve considerable hurdles as long as trucks break down, electricity cuts out, essential workers get sick and ice melts.

SAFE DELIVERY
To safely deliver shots in mainland China and Hong Kong, Fosun will partner with the state-owned Sinopharm Group Co., a pharmaceutical distributor with well-established networks across the country. One of Sinopharm’s subsidiaries has also been developing Covid-19 vaccines.

Packed into cold storage trucks, those vials will arrive at inoculation sites where they can thaw and be stacked in fridges at 2 to 8 degrees celsius for a maximum five days before going bad.

“The requirement for extremely cold temperatures is likely to cause spoilage of a lot of vaccine,” said Michael Kinch, a vaccine specialist at Washington University in St. Louis.

It’s also likely to cost Fosun tens of millions yuan, according to the company’s Chairman Wu Yifang. Fosun is considering importing the vaccine in bulk and filling them into vials at a local plant. That will also require further investment in production and storage.

The resulting price tag may be too hefty for many developing nations, including neighboring India, which has struggled to contain the world’s second-largest coronavirus outbreak and currently has no agreement to purchase the Pfizer vaccine.

Many working in the country’s public health and the pharmaceutical industry have already voiced concern that India lacks the necessary capacity and capability to deliver a vaccine across its vast rural hinterland and population of over 1.3 billion people at the breakneck speed now expected.

“Most of these vaccines need minus 70 degrees, which we just can’t do in India, just forget it,” said T. Sundararaman, a New Delhi-based global coordinator of the People’s Health Movement, an organization that brings together local activists, academics and civil society groups working on public health.

“Our current cold chains are not able to cope with some districts’ need for measles vaccines, and that’s only for children below the age of 3,” he said. “That’s a really trivial number of people compared to the numbers that will need a Covid-19 vaccine.”

When asked at a Tuesday briefing if India’s government would look to buy any of the Pfizer vaccine, Rajesh Bhushan, the secretary at the health ministry, said New Delhi is in talks with all vaccine manufacturers. He added that India was in a position to “augment and strengthen” its existing cold-chain capacity, but declined to release any purchase details immediately.

Pfizer already has orders from some developing countries like Peru, Ecuador and Costa Rica. It’s unclear how widely those nations plan to distribute the shots, but their small orders of less than ten million doses suggest limited deployment.

After the release of their positive preliminary data, some governments have rushed to finalize orders and start negotiations with Pfizer and BioNTech. The European Union (EU) confirmed an order of up to 300 million doses on Tuesday, while the Philippines, Singapore and Brazil said they were in talks.

‘LAST MILE’
Even without the subzero issue, rolling out a vaccine in a short space of time will be a “major challenge” requiring mass paramedical training to administer two-shot doses, said Pankaj Patel, chairman of Indian drugmaker Cadila Healthcare Ltd., which is developing its own experimental plasmid DNA Covid-19 shot.

This is especially so in areas where people are not easily contactable or have to travel long distances to reach vaccination centers. Past vaccination campaigns show that many simply never show up for the second shot, said public health experts. 

The mounting obstacles mean that some developing countries may pass on the Pfizer vaccine, despite early signs of its exceptional efficacy.

“If we were to wait an extra year and have something that’s feasible for us to deliver to as many people as possible in this country, would that be a bad trade-off?” asked Gagandeep Kang, professor of microbiology at the Vellore, India-based Christian Medical College and a member of the WHO’s Global Advisory Committee on Vaccine Safety.

“Based on the cost of the Pfizer vaccine, the logistics of an ultra-cold storage — I don’t think we are ready and I think this is something that we need to weigh the benefits and the costs very, very carefully,” she said. — Bloomberg

Vietnam rebukes Netflix, Apple, over lack of tax payments

HANOI — Vietnam’s information minister on Tuesday accused foreign streaming companies like Netflix and Apple of skirting their tax responsibilities, saying it would create unfair competition for domestic firms.

Foreign streaming firms, which have combined revenues of nearly one trillion dong ($43.15 million) from one million subscribers, according to the information and communications ministry, have never paid tax in Vietnam.

“Domestic companies have to abide by tax and content regulations while foreign firms do not, which is unfair competition,” the minister, Nguyen Manh Hung, told a government meeting. “Some content on Netflix has flouted regulations related to the history and sovereignty of the country, violence, drug use, and sex,” he added.

Vietnam introduced a cyber security law two years ago that requires all foreign businesses earning income from online activities in Vietnam to store their data in the country.

Netflix said it had no plans to place its servers locally or open an office in Vietnam at the moment.

In a statement to Reuters, the firm said it would continue to engage with the government on potential regulations on video on demand services accessible in Vietnam.

“We are supportive of the implementation of a mechanism that will make it possible for foreign service providers like Netflix to collect and remit taxes in Vietnam,” a Netflix spokesperson said. “However today such a mechanism does not exist.”

Netflix was told to remove Full Metal Jacket, a Vietnam War film from its service in the country.

Mr. Hung said the information ministry, finance ministry and tax department were working to facilitate tax collection by calculating foreign streaming firms’ revenues in Vietnam since their entry into the market.

Tech giants are increasingly facing tougher fiscal regimes in Southeast Asia, where regulators held talks last year on a regional push to tax them more. The Philippines, Thailand and Indonesia have recently passed or drafted legislation aiming to ensure taxes are paid. — Reuters

Hong Kong-Singapore travel bubble to start on Nov. 22

HONG KONG/ SINGAPORE — A travel bubble between Hong Kong and Singapore will begin on Nov. 22, the two cities announced on Wednesday, as they moved to re-establish overseas travel links and lift the hurdle of quarantine for visiting foreigners.

Hong Kong’s Commerce Secretary and Singapore’s Transport Minister said the scheme would begin with one flight a day into each city, with a quota of 200 travellers per flight. This would be increased to two flights a day into each city from Dec. 7.

If the coronavirus disease 2019 (COVID-19) situation deteriorated in either city the travel bubble would be suspended, they said.

Singapore’s Transport Minister Ong Ye Kung said he believed the travel bubble was the first of its kind in the world and enabled both cities to open up borders in a controlled manner, while maintaining safety. Travellers from both cities must travel on designated flights and must undertake COVID-19 tests. No quarantine would be required in either place and there would be no restrictions on the purpose of travel.

For Hong Kong, which has banned non-residents since March, the deal with Singapore is its first resumption of travel ties with another city. Travellers from mainland China and neighboring Macau still face 14 days in quarantine.

Eligible Hong Kong residents in Guangdong province and Macau will be exempted from quarantine in Hong Kong under a quota scheme from Nov. 23, Hong Kong authorities announced on Wednesday.

Singapore already has pacts on essential business and official travel from China, Indonesia, Japan, Malaysia, South Korea, and opened unilaterally to general visitors from a handful of countries including Brunei, New Zealand and Vietnam.

Cathay Pacific and Singapore Airlines would be the carriers offering the initial designated travel bubble flights, according to authorities. — Reuters

Penultimate legislative priority

The Senate is now working on the 2021 budget bill, deliberating on proposed changes to the version earlier approved by the House of Representatives. Towards the end of this month, lawmakers from both the Senate and the House are expected to meet and finalize all revisions to the bill, before approving it before the Christmas break.

Along with the budget bill, senators are also expected to finalize their version of the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE). The proposed law aims to reduce the corporate tax to 25% from 30% in 2021, and further down to 20% by 2027. CREATE will also overhaul the system for the grant of fiscal incentives or tax perks for investors and businesses.

So, on the one hand, senators are deciding on a bill that will significantly increase the national budget to P4.5 trillion, as it also provides an appropriation for the purchase of COVID-19 vaccines, in 2021. On the other hand, they are also deliberating a proposed law that may actually cut government revenues for 2021 onwards by reducing corporate taxes. Like the budget bill, the CREATE bill is expected to get through before the Christmas break.

Incidentally, there are a number of bills pending at the Senate regarding the creation of new economic zones. In particular, these are bills that will put up new industrial sites in Leyte and Bulacan (for the proposed international airport). As these bills have “fiscal incentives” components, perhaps the Senate will choose to make these bills consistent with the proposed CREATE Act.

The Senate leadership also hopes to get a few other urgent bills out to the plenary for approval by December. In a way, for both the House and the Senate, we may already be looking at the penultimate legislative agenda. The year 2021 will be the last full calendar year for the present Congress, which closes just before presidential and legislative elections in May 2022. There are only 20 months left for the 18th Congress.

For the Senate, these urgent measures include the proposed Financial Institutions Strategic Transfer (FIST) Act, which will pave the way for banks to sell non-performing assets to asset management companies that will rehabilitate these bad assets and perhaps sell them for profit in future. The bill aims to keep the banking system strong.

Over at the House, Majority Leader Martin G. Romualdez said lawmakers would hasten the approval of 12 economic measures sought by the Department of Finance (DoF) to help the government “jumpstart the economy.” Of these bills, five are undergoing interpellation or debates, while seven are being discussed at various committees.

These bills propose, among others, to make government banks assist or lend more to small businesses; modernize the fire protection service and the armed forces; overhaul the military and police pension system; and promote the development of the coconut industry through the creation of the Coconut Farmers Trust Fund.

But there are three tax bills and two government reorganization bills that are worth watching. And then, there is the proposed National Land Use Act. These six bills at the House, in my opinion, have very significant implications, given their potential impact on the present and future economy.

The tax bills are the proposed Digital Transactions Value-Added Tax Act; HB 6135, which proposes a new fiscal or tax regime for the Mining Industry; and, the proposed Internet Transactions Act as an amendment to the current E-Commerce Law. And then, there are the two bills that proposes the creation of the Department of Water Resources and the Water Regulatory Commission, as well as the National Disease Prevention and Management Authority. And, as mentioned, there is also the proposed National Land Use Act.

According to Mr. Romualdez, he has no doubt that the House “will be able to pass all these measures before the onset of election fever next year [2021].” And here lies my concern, really. While expediting the approval of these measures may be welcome, I just hope the House — and later the Senate — will not hasten approval just to meet a deadline. Haste can make waste.

Given these bills’ potential implications on the economy and the way we do business in the country, I hope these will be given ample time and study prior to consideration. In this line, all those in these sectors should already start preparing to either support or oppose these bills, for reasons and consideration based primarily on science, economics, and data.

The worst that can happen is that politics will be the bigger consideration, or perhaps the elections themselves. And that the work, rather than being in aid of legislation, becomes in aid of re-election. Note that of the six bills, three are tax-related or will impose new taxes. Of course, nobody but nobody will want to be known as supporting new tax laws just prior to an election.

Two bills in particular, the proposed Digital Transactions Value-Added Tax and the proposed Internet Transactions Act can have broad impact particularly more on consumers rather than producers or sellers. VAT is a consumption tax. While many online purchases to date are still free from VAT, this may no longer be the case by 2022 — an election year. New taxes on the mining industry may be limited in scope, and impact mainly miners.

As for the National Land Use bill, it remains uncertain whether this will also have tax or revenue implications. Changes in land classification can impact real property values and taxes as well as zonal valuations. Or, the implication may be on the supply of land available for conversion and commercial and industrial development; or on zoning restrictions that may require certain industries to relocate.

And, last but not least are the government reorganization bills, particularly on the creation of the National Disease Prevention and Management Authority. This, of course, becomes doubly significant in light of what we are experiencing with the present pandemic and how government resources were squandered by PhilHealth. The reality now is that such a thing — pandemic and corruption — can happen again.

As for the Department of Water and the proposed Water Regulatory Commission, I can only hope that due consideration be given the concerns of various stakeholders. One cannot overemphasize the importance of water resources to the country, its people, and the economy. There is an obviously urgent need to ensure supply security while at the same time improving people’s access to clean, safe drinking water.

With everything that is happening around us, Congress must work truly in aid of legislation, to benefit the people, rather than in aid of re-election in the next 20 months.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

World’s populists may regret their embrace of Trump

WE KNOW that US President Donald Trump loves strongmen. He was famously soft on Vladimir Putin’s Russia; he welcomed Hungary’s xenophobic Viktor Orban to Washington by saying he had done “the right thing” by restricting immigration; and he said he got along better with world leaders “the tougher and meaner they are,” singling out Turkish President Recep Tayyip Erdogan as the toughest and meanest.

And the strongmen loved him back. Orban wrote an op-ed during the election campaign hoping Trump would defeat the Democrats, whom he called “moral imperialists.” Brazil’s Jair Bolsonaro said he hoped “from the heart” that Trump would be re-elected; and Slovenia’s Janez Jansa used various conspiracy theories to justify a call congratulating Trump on winning re-election.

Perhaps it isn’t surprising that populist, right-wing strongmen get along well with each other. But their camaraderie provides yet more evidence of how these supposedly nationalist leaders place their own interests above those of their nations.

In the coming weeks, many are going to have to back away awkwardly from their embrace of Trump. Israel’s Benjamin Netanyahu began even before the election, smoothly avoiding Trump’s attempt to get him to criticize his Democratic opponent Joe Biden on a phone call. And then, in what one Israeli journalist called “Netanyahu’s two-tweet solution,” he both welcomed Biden’s victory and thanked Trump for his support of Israel.

India’s Narendra Modi has set himself a more difficult task. Modi and Trump held a joint rally in Houston last year, at which the Indian prime minister approvingly quoted a variation of one of his own campaign slogans — “Ab ki baar, Trump sarkaar,” or “Next time, a Trump government” — in what many observers saw as an explicit endorsement of the president.

The Indian ambassador in Washington — now back in New Delhi as India’s top diplomat — met Steve Bannon and described him in a now-deleted tweet as a “warrior for Dharma.” Stung by criticism from Democratic legislator Pramila Jayapal, the Indian foreign minister canceled a meeting with members of the US Congress. And the general secretary of Modi’s political party warned Democrats, after a tweet from Sen. Bernie Sanders critical of Trump’s tacit approval of anti-Muslim riots in Delhi, that his party was now “compelled” to “play a role in the US presidential elections.”

None of this made much sense at the time; now it looks incredibly short-sighted. Like their counterparts in similarly placed countries, Indian leaders are reduced to hoping that Biden won’t make the same mistakes they did — in other words, that his administration will look beyond who’s in power at the moment and focus on long-term ties.

Officials in New Delhi are feverishly reminding themselves and anyone else who will listen that Biden was one of India’s strongest backers on Capitol Hill, that he had nice words for the country even when it was the subject of international condemnation following its nuclear tests in 1998 and that he was one of the leaders of the bipartisan charge to normalize strategic relations between the two countries through an agreement on nuclear energy in the 2000s.

Other nations led by impulsive populists are also being forced to praise a bygone era of bipartisan diplomacy. Brazil’s Foreign Minister Ernesto Araujo told Bloomberg News that warming ties “happened between Brazil and the US, not between two presidents.” UK Prime Minister Boris Johnson spoke of the “shared priorities” of his country and the US.

But you would struggle to find anyone in these capitals who would disagree that their leaders’ impetuousness over the past few years won’t be a hurdle in the next four.

And this time they’ll be dealing with Biden, a man likely to take the pragmatic, long view — even with Johnson, who upset both Biden and Sen. Kamala Harris with his borderline-racist remarks about Barack Obama some years ago. Suppose it had been Sanders? Suppose the progressive wing of the Democratic Party has the next chance at government? Is it wise for any ally or friend of the US to infuriate potential American leaders to this degree?

That’s the problem with the new breed of nationalists. They aren’t actually interested in the national interest at all. Without exception, they evaluate actions in terms of whether they offer immediate political benefits or, more often, a momentary ego boost.

It’s all very well to talk of the benefits of “personal diplomacy.” Most of the time, it’s just one strongman desperately seeking validation from another. This is no way to build deep, strategic partnerships.

BLOOMBERG OPINION

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